Land and Building Grant:Provision for right of use shown in Equity

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Lasa1
Posts: 22
Joined: 07 Oct 2020, 11:29

Land and Building Grant:Provision for right of use shown in Equity

Post by Lasa1 »

Hello,

In the WTO annual report there is a provision for a right of use of a land and a building shown in Equity.
The variance year over year of this provision is the 0.6 depreciation which increases profit.
This land and building were donated by the local government years ago and WTO follows IPSAS not IFRS. I know this forum is IFRS but still will raise the question.

For grants, is the normal accounting practice to report a provision in Equity? and should not be the counterpart a Right of use asset [ASSET] – that I do not see in the BS attached ?
Also struggling to understand why the depreciation increases and not decreases the profit. Any thoughts?

Thanks
Regards
Cecilia
https://docs.wto.org/dol2fe/Pages/FE_Se ... anged=true
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PNL.pdf
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BS.pdf
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Marek Muc
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Posts: 1401
Joined: 15 Oct 2018, 17:21
Location: Warsaw, Poland

Re: Land and Building Grant:Provision for right of use shown in Equity

Post by Marek Muc »

it's not under IFRS so I'm moving this topic to general accounting discussion

Maybe the building is included in the 'buildings' part of assets and its depreciation is included in total depreciation
at the same time, the equity part is recycled to P&L to show the consumption of the grant (DR equity CR P&L)
but it's just a guess, I know nothing about IPSAS
Lasa1
Posts: 22
Joined: 07 Oct 2020, 11:29

Re: Land and Building Grant:Provision for right of use shown in Equity

Post by Lasa1 »

Thank You!
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Marek Muc
Site Admin
Posts: 1401
Joined: 15 Oct 2018, 17:21
Location: Warsaw, Poland

Re: Land and Building Grant:Provision for right of use shown in Equity

Post by Marek Muc »

and why do you find WTO's annual report interesting if I may ask? :)
Lasa1
Posts: 22
Joined: 07 Oct 2020, 11:29

Re: Land and Building Grant:Provision for right of use shown in Equity

Post by Lasa1 »

I applied to a position and just gathering some information.
Further in the report it is stated: “A provision for the right of use of the building is reported as part of the equity of the WTO and has appreciated accordingly using the same rate of depreciation as that of the Building, resulting in a net-off effect."
So, if I understood you correctly, your guess was right.
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